Chances are you are among those perusing the lists of bestselling books of 2015 and the critics’ best-read selections for a gift or for something to read over the Christmas and New Year break.
Perhaps you have John Grisham’s latest legal thriller, Rogue Lawyer, in mind, Jane Austen’s classic Pride and Prejudice (to reread for the fifth time or so) and maybe The Light Between Oceans, an Australian top seller by M.L. Stedman.
And possibly you may also find a place on your holiday reading list for something different from the current bestsellers and all-time favourites. Take a look at your bookshop’s personal finance shelf – while staying away from the relentless and potentially wealth-destroying get-rich-quick guides.
The holiday break can provide an ideal environment away from the distractions of work to read and think about how to improve your personal finances.
The best publications in this genre tend to provide pointers about how to accumulate wealth slowly and progressively through an understanding of the fundament principles of sound saving and investment practices. These are the opposite of the get-rich-quick offerings.
Personal finance books to consider for Christmas reading include:
- The Millionaire Next Door by late US academics Thomas Stanley and William Danko. Their long-term research suggests that "prodigious accumulators of wealth" are typically content to progressively build their wealth while not being conspicuous in their spending. In other words, these wealth accumulators are not in a hurry to make their money by taking excessive risks or to spend their money.
- The Little Book of Commonsense Investing by Vanguard founder Jack Bogle highlights among other things the benefits of low-cost traditional index funds and Exchange Traded Funds (ETFs) tracking broad market indices. As Bogle writes in his characteristic style: "The more the managers and brokers take, the less investors make."
- Thinking, Fast and Slow by psychologist Daniel Kahneman, a winner of the Nobel Prize for economics, points to the many flaws in decision-making that can have costly consequences for an investor. His views should underline the benefits of having an appropriately diversified portfolio while avoiding the potential traps of market-timing, stock-picking and making emotionally-driven investment decisions.
- The behaviour Gap: Simple Ways to Stop doing Dump Things with Money by financial planner turned personal finance columnist Carl Richards. An entertaining, easy-to-read guide to keeping our negative behavioural traits under control when saving, investing and spending.
- Retirement and Aged Care Living – a Financial Planners’ Guide for Clients Preparing For and in Retirement published by Thomson Reuters in Australia. Given the waves of baby boomers now nearing, entering or in retirement, this new publication by personal finance specialists Sean Howard, Rachel Lane and David Williams is timely. The book’s straightforward, practical style makes it a useful practical guide for informed individuals and their families as well as their advisers.
And there’s Vanguard’s Principles for Investing Success. This long-standing and regularly-updated research paper suggests that investors take four fundamental steps in their efforts to succeed. These are: set appropriate investment goals, develop an appropriate long-term asset allocation for your portfolio, minimise investment costs and keep your emotions under control.
One of the best Christmas presents you can give yourself and your family is to get your saving habits and investment portfolio into shape. Get reading.
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Robin Bowerman is Head of Market Strategy and Communication, Vanguard Australia. As a renowned market commentator and editor Robin has spent more than two decades writing about all things investment. |
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